I'm currently vat registered on the flat rate scheme as it is the cheapest option for me but I want to transfer to standard rate at the end of the current vat period. My question is can I purchase stock now and reclaim the vat in my next vat period, or is it only for purchases made in that period.
I will not sell this stock until after my current period has ended and I've transfered onto the standard rate, but can I make purchases now?
Many thanks for any advise.
Rory.
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Thanks,
I've checked out that link I'm still unclear. Would it be simpler if I waited for my new vat period to purchase new vat deductable stock or is it ok to start purchasing now and only sell in the new period?
Thanks again.
I'm not sure what is unclear
Taking the simplest situation where you don't hold any stock that was purchased before you joined the Scheme, then you simply need to determine the value (cost) of stock held when you leave the Scheme, and claim the input VAT on your next return.
What is unclear?
You can claim back the VAT on any increase of your stock during the period that you were operating the Flat Rate Scheme. If you operated FRS from the start of trading, you can claim the VAT on all the stock on hand when you leave the scheme.
The problem with the worked example in para. 12.9 is that the opening stock of £10,000 is identical to the increase of £10,000 during the period that FRS was being used. It is the latter on which you can claim back the input VAT on your first VAT return after leaving the scheme.
Don't forget to apply to HMRC to leave the scheme as set out in para. 12.1.
how much to claim
So when leaving the scheme I do a stock take and can I then claim 20% of this value on my next return. Can I do this if the goods have been imported and only import vat paid?
Yes and I think so
On the second point, HMRC do not appear to specifically address the point. But since the purpose of the adjustment is to allow you to recover input VAT relating to sales on which standard VAT accounting is applied, and you would have been able to claim such VAT as input VAT under standard accounting, I would say yes you should be able to make the adjustment. But if anyone knows differently ........